Banks Just Don't Get It

Recently, I railed about agents charging potential buyers for the costs of a "special" negotiation team in securing the debt forgiveness. This was over and above the traditional commission being earned and I felt very strongly that buyers were being gouged.

Later this week, I will have another tirade on how banks are abusing the very people they need, in order to extricate themselves from a mess, largely of their own making.

Meanwhile, I continue to be disappointed by the demands made of buyers by the banks themselves. Many have taken to requiring a potential buyer to qualify with a "preferred" lender. You don't have to use them, of course, but you are requested to at least pre-qualify. I saw one this week that required a buyer to fill out an attached form. Among the required information was not only your social security number, but also your mother's maiden name. All this to be faxed (how very secure) to "Joe's House-Painting, Pet-Sitting and Mortgaging Emporium". In the identity theft capital of the world, as Phoenix most certainly is, this is surely a recipe for disaster. This was not even a recognized bank, although that would hardly improve the situation, but a rinky dink mortgage broker that I had never ever heard of. I would add, that I have so far not allowed a client of mine to be blackmailed in such a fashion, and I have yet to lose a deal because of it. However, in the above example, the agent who "requested" that you comply, stated categorically that your offer would not be presented without it.

Essentially, today's buyer is not being treated with any respect, despite being an extremely valuable commodity and the only way out of this current quagmire.

Banks are sending a very clear message. Even though you have been through the trouble of getting yourself pre-approved, they do not care. They are telling you that they do not trust their "colleagues" in the lending industry. Yet, even while they are telegraphing their mistrust, they are insisting that you place all your trust, and financial information, in them. They are arrogant beyond belief and I suggest that we, as an industry, ride them as hard as possible until they learn better manners.

More to come, stay tuned!

Short Sales; Some Disturbing New Trends

As a Realtor, I am still astounded at how some neighborhoods remain awash in distressed properties, be they short sales or foreclosed homes. Of course, it's not too surprising, especially when you realize that pretty much any home built or sold after 2004 is worth less today, than it was then, at least in the Phoenix area. Many subdivisions that were built in 2006 and 2007 have virtually no original owners. Most have simply walked away, as prices halved, whether they could make the payments, or not. That is a subject for another day, although I will allow that the economy likely hurt many of them, while another large section of buyers took on debt they could not really afford, in the hope of continued appreciation that failed to materialize. All the while, aided and abetted by voracious bankers.

Recently, I was working with an elderly couple who were looking to downsize into a newer home. As usual, we ran into the problem that many homes on offer were short sales. They had neither the time, nor the inclination, to embark on what can be a lengthy process, so we concentrated on REOs and regular sales.

However, whilst skimming through some short sales, I was taken aback by the conditions of many sellers. I am used to a seller demanding the buyer qualify with a pre-selected lender, and I am used to not complying with that request. I see no benefit in my client divulging all their personal financial information to some lackey at a random bank. As I said, I was taken aback by a listing agent that disclosed that the short was being negotiated by a special company and that the buyer was required to pay the $4,000 fee associated with this service. This fee coming on top of the 6% listing fee that is customary in our market. Then, and at least they disclosed it, they revealed on their business affiliation disclosure, that the crack negotiating team was, in fact, a subsidiary of their own real estate company. All this on a $200,000 listing, which means the additional burden on the buyer was 2% of the asking price. Here's a newsflash! If you are unable to negotiate short sales, do not accept listings that require them!

In another short sale offering, the lister disclosed that the bank may, or may not, at its discretion, impose an extra 1% fee on the potential buyer. Genius! Punish the very person who is getting you out of the mess that you were, at the very least, partially responsible for creating. Some of these banks are as useful as a screen door on a submarine.

It will get worse. The ill-advised first time home buyers tax credit of $8,000 will be expiring at the end of June. Watch how many well-intentioned and eager would-be purchasers get entangled in the net of indecision that plagues most banks and their alleged decision makers.

Watch how eagerly our elected officials will scramble to re-fix the fix that they caused to be broken in the first place.

It's gonna be a bumpy ride.